IRS Proposes Expanding Tax Return Information It Will Disclose to HHS Under Health Care Acts

On April 27, the IRS issued proposed regulations relating to how it will release certain tax return information to the Department of Health and Human Services (HHS), as required by 2010’s health care legislation (REG-119632-11). The proposed regulations describe certain items the IRS will disclose in addition to those required by Sec. 6103(l)(21).

The Patient Protection and Affordable Care Act, P.L. 111-148, required the HHS to establish a program under which affordable insurance exchanges can determine whether individuals are eligible to enroll in qualified health plans under the exchange and eligible for other benefits under the health care acts. Sec. 6103(l)(21) permits the IRS to disclose to the HHS certain tax return information to help the exchanges determine taxpayer eligibility where income verification is required.

Sec. 6103(l)(21) identifies specific items of return information that will be disclosed and permits disclosure of other items prescribed in regulations. The statutory items include the taxpayer’s identity and filing status, the number of personal exemptions claimed, and the taxpayer’s modified adjusted gross income.

Under the proposed regulations, items the IRS will disclose include adjusted gross income, any amount excluded under Sec. 911, tax-exempt interest, the fact that the taxpayer did not have a filing requirement for the year, and the fact that the taxpayer did not file a return for the year reconciling advance payments of the Sec. 36B premium tax credit with the amount of the premium tax credit available for the year.

The proposed rules would be effective upon being published as final regulations.

Requests for comments on health care issues

On April 26, the IRS issued three notices requesting comments on various requirements under the health care legislation. Notice 2012-31 requests comments on several possible approaches for determining whether health coverage under an eligible employer-sponsored plan provides “minimum value” for purposes of the premium tax credit under Sec. 36B.

In Notice 2012-32, the IRS asks for comments on the Sec. 6055 reporting requirements for health insurance issuers, government agencies, employers that sponsor self-insured plans, and other persons that provide minimum essential coverage to an individual.

Notice 2012-33 requests comments on reporting under Sec. 6056 by applicable large employers that are subject to the requirements of Sec. 4980H. Sec. 4980H imposes a penalty on any large employer if at least one of its full-time employees is certified to receive a premium tax credit because the employer-sponsored coverage either does not provide minimum value or is unaffordable.